Clash of the Truckstop Titans
Fleet card boycott drives Flying J suit against TA, Pilot
OGDEN, Utah -- In late February, truckstop company Flying J Inc. filed suit against two of its biggest competitors. The suit, filed in U.S. District Court in Salt Lake City, accuses TravelCenters of America (TA) and Pilot Travel Centers LLC of boycotting Flying J fuel cards, reported the Salt Lake Tribune.
The alleged boycott reportedly began under pressure from a competitor of Flying J's cards, Comdata Corp., which controls 70% of the trucker fuel card market, said the report.
Flying J declined to talk about the suit, the newspaper [image-nocss] said. The company, which is said to have a penchant for secrecy, instructed its lawyers not to comment. Travel America also was unwilling. A Pilot spokesperson, James Allen, told the paper that his company is aware of its obligations to respond to the lawsuit, but at this time we have no further comment. Comdata also did not return a telephone call seeking comment.
Even so, the lawsuit opens a window onto Flying J and the struggle for power in the trucking industry, said the report. One anonymous observer told the Tribune that the suit is a huge deal, if for no other reason than the plaintiff and defendants are some of the biggest truckstop operators in the country. It suggests that the boycott has cost Flying J substantial amounts of revenue, restricts the number of truckstops where truckers can fill up using Flying J's card, and increases their expenses, the report said.
Ogden, Utah-based Flying J operates 170 travel plazas and fuel stops in 44 states and Canada. In 2005, sales in 2004 totaled $7.3 billion. TA, Westlake, Ohio, operates 159 truckstops in 41 states. Pilot, Knoxville, Tenn., jointly owned by Pilot Corp. and Marathon Ashland Petroleum LLC, operates 260 truckstops in 39 states. It had revenue of $7.2 billion in 2004.
Flying J wants its fleet cards to be accepted at TA and Pilot's truckstops. When Flying J entered the fuel card market in the mid-1990s, it went up against Comdata, a subsidiary of Ceridian Corp. that had recently purchased a point-of-sale (POS) computer system to process fuel card transactions. The system was in use at virtually every truckstop in the United States, with the exception of Flying J, according to the report. Comdata was also in the midst of buying the fuel card businesses of other companies.
In 1996, Flying J brought an antitrust suit against Comdata, alleging that the company had monopolized the markets for fuel cards and systems to process fuel card transactions, and was using that power to block Flying J's efforts to establish its fuel card business. Five years later, Comdata agreed to settle the dispute without admitting wrongdoing. According to a court document cited by the Tribune, Comdata had engaged in a campaign to pressure truckstops not to accept the TCH fuel card, which is how Flying J cards are known.
The document said Comdata had placed more than 400 telephone calls to truckstops and threatened to raise transaction fees on Comdata fuel cards if they agreed to accept Flying J's TCH cards. Comdata consented to pay damages of $49 million to Flying J. Comdata also agreed to grant Flying J two licenses that obligated it to process all TCH cards.
But the conflict did not end, said the report. Angered by what it believed was Comdata's refusal to honor one of the licenses, Flying J filed a motion in 2002 in U.S. District Court in Salt Lake to enforce the settlement. Flying J argued that Comdata was refusing to process a TCH MasterCard in the same way it dealt with other TCH cards.
The court ordered Comdata to process the card. It appealed to the 10th Circuit Court of Appeals in Denver, which overturned the lower court's order last April. Comdata successfully argued that it was not required to process TCH MasterCards unless MasterCard concurred and the truckstops where purchases were made had a separate agreements with Flying J.
Although most truckstops have such agreements with Comdata, some have refused to sign pacts with Flying J. Comdata said the reason is that Flying J, which operates truckstops, is seen as a competitor. Comdata, which does not run truckstops, is not.
Flying J contends that its suit filed in February against TA and Pilot Travel Centers has nothing to do with the Circuit Court's reversal. But much of its argument is based on allegations that Comdata continues to dominate the markets for fuel cards and for POS fuel card processing systems, the report said.
Flying J alleges that Comdata charges a higher transaction fee to truckstops that also accept TCH fuel cards. The suit alleges that TA and Pilot have refused to accept any TCH cards since the time they were introduced. The suit asks the court to issue an injunction to stop the alleged boycott and impose damage fees against TA and Pilot.